Supreme Court Rules Taxpayer Can Challenge IRS Summons

IRS agents could be examined at an evidentiary hearing based on a taxpayer's mere "conclusory allegations"

The U.S. Supreme Court on Thursday ruled unanimously that taxpayers have a right to challenge an Internal Revenue Service summons enforcement action in court when they can show the tax agency might have issued the summons in bad faith.

But the nine justices sent the case back to the 11th U.S. Circuit Court of Appeals and said that court had wrongly decided that IRS agents could be examined at an evidentiary hearing based on a taxpayer’s mere “conclusory allegations.”

Although the Supreme Court scaled back the Atlanta-based appeals court’s taxpayer-friendly ruling from 2013, the high court decision might make it harder for the IRS to avoid summons challenges in district court, tax lawyers said.